Financing Balloon after Ford Options

[lwatkin9]

I was told the Ford Options was permanent with the option to hand the car in. So why would rate change if I decide to keep it?

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[ChuckA]

I was told the Ford Options was permanent with the option to hand the car in. So why would rate change if I decide to keep it?

What you may have been told has no bearing on the financing contract you signed. If you turn the car in, future interest rate is not applicable.

My contract has a section called “balloon payment contracts” which spells out the alternative ways to handle the balloon. Turning the car in costs me $475 and an inspection.

 

[generaltso]

I was told the Ford Options was permanent with the option to hand the car in. So why would rate change if I decide to keep it?

What do you mean by permanent? You chose a 3 year term or a 4 year term. Then you have to pay the balloon or turn in the car.

 

[RedStallion]

Anyone refinance the Ford Options balloon payment through Ford Credit? What is your interest rate?

In my contract (in CT), it reads like the interest rate will change but the payment amount stays the same. This makes the refinanced term less then 36 months.

It doesn't make sense refinancing Ford Options. You would be effectively financing a car for 6 years (from the purchase date) at high interest rate. The whole point of Ford Options is either paying a balloon payment or returning the car.

P.S. I don't think you can find any bank willing to finance a used car for under 6% APR, because it doesn't make sense for them taking on risk with no real return when short term Treasuries yield over 5%.

 

[ridgebackpilot]

Interesting discussion, especially since I have two MMEs, both financed through Ford Options.

Given current incentives from Ford Credit, the smartest thing to do for any Options contracts coming due now would be to trade in your car on a new one. That’s because Ford just announced they are offering 60 months at 0 percent APR.

Of course, I realize our contracts haven’t yet matured and such incentives may not be on the table when they do. But the current 0 percent offer made me wonder whether I can exercise my trade-in option early? My wife’s MME now has more than 40,000 miles on the clock.

In any case, by the time our Options contracts come due, I expect Ford will have some new EVs on the market, such as an electric Explorer or Edge. Now that’s something to look forward to!

 

[RickMachE]

I was told the Ford Options was permanent with the option to hand the car in. So why would rate change if I decide to keep it?

Options is a 3 or 4 year payment, then a balloon payment due. You have 3 choices:

1) Hand Ford the keys.
2) Hand Ford a check for the balloon payment (or get a 3rd party used car loan).
3) Refinance the balloon payment with Ford.

Interesting discussion, especially since I have two MMEs, both financed through Ford Options.

Given current incentives from Ford Credit, the smartest thing to do for any Options contracts coming due now would be to trade in your car on a new one. That’s because Ford just announced they are offering 60 months at 0 percent APR.

Of course, I realize our contracts haven’t yet matured and such incentives may not be on the table when they do. But the current 0 percent offer made me wonder whether I can exercise my trade-in option early? My wife’s MME now has more than 40,000 miles on the clock.

In any case, by the time our Options contracts come due, I expect Ford will have some new EVs on the market, such as an electric Explorer or Edge. Now that’s something to look forward to!

I guess I don't understand your logic, i.e. the smartest thing to do is to trade the car in. Let's go through that.

To trade it in, you have to also pay off the balloon payment. So if you owe $24,000, and the value of the car is say $20,000, Ford is going to ask for $4,000. Trading in would only make sense if the balloon is less than the car's value.

Now, let's assume the car is worth $28,000, and your balloon is $24,000. You get $4,000 in your pocket and Ford sells you a 2024 for $50,000 at 0% financing?

I don't get how this is better? If the car is worth less than the balloon payment, you hand them the keys and walk away. You have no trade, you have bupkis.

 

[ridgebackpilot]

Like any trade, the value of an MME is negotiable, as are the terms of the trade-in. If I’m a buyer for a new MME, I suspect Ford and the dealer will work with me to find a way to make that happen.

I need to read the details of my Options contract again. Especially the part about how trade-ins work v. making the balloon payment and keeping the car. Is there a difference?

 

[RickMachE]

Like any trade, the value of an MME is negotiable, as are the terms of the trade-in. If I’m a buyer for a new MME, I suspect Ford and the dealer will work with me to find a way to make that happen.

I need to read the details of my Options contract again. Especially the part about how trade-ins work v. making the balloon payment and keeping the car. Is there a difference?

Trade-ins works as I stated. Payoff the balance, apply any proceeds if the dealer gives you a higher value. If you're underwater, good luck.

https://www.ford.com/finance/finance-options/ford-options/


Three Flexible Options
Renew: Replace with a new Ford or Lincoln.
Trade in or sell the vehicle to a third party and apply the proceeds to your remaining account balance. Any excess value after settling the account may be used as a down payment toward your new Ford or Lincoln.

Retain: Keep the vehicle.
Satisfy the account with Ford Credit by paying the final balloon payment and any remaining balance.

Return: Transfer ownership of the vehicle to Ford Credit.*
At the end of term, return your vehicle. An amount equal to the original scheduled final balloon payment will be applied toward the satisfaction of your last installment payment. The returned vehicle is subject to excess mileage charges, excess wear and use charges, unpaid payments, a $475 disposal fee and any other outstanding fees. Wear and use guidelines apply – see the wear and use guidelines for details.

 

[generaltso]

I need to read the details of my Options contract again. Especially the part about how trade-ins work v. making the balloon payment and keeping the car. Is there a difference?

Not really. Trading in for new made sense a year ago since the values were so high. But it makes a lot more sense to just pay the balloon and keep the car at this point if you would just be trading it in for the same car. Why take the depreciation hit twice?

 

[jgillmer]

I think if you're expecting anything other than market rate, you're in for a surprise. It would make zero sense for Ford to offer you a 3 year payment schedule, then a balloon payment for another t3 years that was the same with the same rate.

You took a risk, i.e. in 3 years you can hand the keys over, or pay off the balloon, or refinance it. That risk isn't going to be at the same rate.

There is also the options to trade in for a new Ford (not just toss them the keys and say "have a nice day," and private sale in advance of the balloon. I have a 48 month at 1.4% (and the $2,500 they gave me to go with the Option basically covered the interest plus the ResistAll).

For me, the 48 month mRk is Oct. 25 - just around the time of a refresh. I'd hate to have a 400v build slightly tweaked '20-24 for another 4-5 years as a brand new and watch every Tom, Dick, and Harry in crappy Kias charging 20-80% on a 350 mile range in 15 minutes, and I'm still stuck with 38-45, on even the fastest rates.

 

[ChuckA]

It doesn't make sense refinancing Ford Options. You would be effectively financing a car for 6 years (from the purchase date) at high interest rate. The whole point of Ford Options is either paying a balloon payment or returning the car.

P.S. I don't think you can find any bank willing to finance a used car for under 6% APR, because it doesn't make sense for them taking on risk with no real return when short term Treasuries yield over 5%.

I meant refinancing the balloon after the 36 or 48 months Ford Options.

 

[ChuckA]

There is also the options to trade in for a new Ford (not just toss them the keys and say "have a nice day," and private sale in advance of the balloon. I have a 48 month at 1.4% (and the $2,500 they gave me to go with the Option basically covered the interest plus the ResistAll).

For me, the 48 month mRk is Oct. 25 - just around the time of a refresh. I'd hate to have a 400v build slightly tweaked '20-24 for another 4-5 years as a brand new and watch every Tom, Dick, and Harry in crappy Kias charging 20-80% on a 350 mile range in 15 minutes, and I'm still stuck with 38-45, on even the fastest rates.

Yes..trading in or private sale is an Unstated alternative. Remember that Ford is holding onto your title as collateral. Makes private sale difficult as you’ll need to payoff to obtain the physical title, I think.

 

[RickMachE]

Yes..trading in or private sale is an Unstated alternative. Remember that Ford is holding onto your title as collateral. Makes private sale difficult as you’ll need to payoff to obtain the physical title, I think.

It's actually the first stated option from Ford...

 

[generaltso]

Remember that Ford is holding onto your title as collateral. Makes private sale difficult as you’ll need to payoff to obtain the physical title, I think.

That‘s extremely common. Titles are held by finance companies in most states.

 

[solarmoo900]

Has anyone reached out to Ford to ask about this? I have the same terms as posted by
macchiaz-o but I'm trying to figure out how this works out

I'll have a $25,398 balloon payment due so if they agree to keep the same monthly payment for 36 months then it seems like I'd pay $29,394.72 (my monthly is $816.52) which would be about a 9.75% interest rate which seems pretty bad for today's used car market?

I am starting to think that the best move is going to be refinancing with a third party. I don't necessarily want to pay the $25k cash and they would probably have to offer some insane financing to get me to turn it in and upgrade

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